Photo-Me Seeks Laundry After Cleaning Up With Picture Booths
As film pioneer Eastman Kodak Co. (EKDKQ) exits bankruptcy with a strategy to abandon regular consumers, Photo-Me International Plc (PHTM) is going a different direction. The world’s largest photo-booth operator wants your dirty laundry.
The U.K. company is shrinking its photo developing unit as the digital revolution zaps the film industry. Photo-Me already has a sideline in coin-operated kiddie rides. So why not try laundry machines and streetlights?
The company’s eclectic mix of instant service machines means that when you go for groceries, you might plunk the kid on a mini carousel, climb in a booth for passport photos and toss the duvet into a washer-dryer. All under solar streetlights with surveillance cameras -- another Photo-Me enterprise.
“Our core business is cash generative and profitable so we can afford to take some time to find other things that will work in the future,” Finance Director Francoise Coutaz-Replan said in a phone interview from Photo-Me’s headquarters in Surrey, England. “Every new product has been a new idea from our CEO.”
That’s Serge Crasnianski, a 71-year-old trained nuclear physicist who founded Photo-Me forerunner KIS to make key-cutting machines when he was 21. He was ousted from the top job by shareholders in 2007 and got it back two years later. Since then, investors have been rewarded as Photo-Me’s stock rose almost sixfold, beating all but three of the 252 companies in the FTSE Small Capitalization Index.
“When Serge retook the reigns of management, the business was carrying a lot of costs, its product base was arguably out of date and the manufacturing costs were too high,” said Mark Paddon, an analyst at Finncap, Photo-Me’s corporate broker.
“He has done a brilliant job” with products and cost reductions, Paddon said. The stock “is moving to a growth profile, so rather than just yield investors getting involved in it, growth investors are now looking at it as well.”
Photo-Me started delivering self-service “Revolution” laundry machines this year, with the largest drum three times the size of an average household washer. It plans to install 5,000 in France in the next four years, mostly outside supermarkets that have its photo booths, Coutaz-Replan said.
The company is testing solar streetlights and developing 3D printers while working on DNA-me, a booth for people to trace their ancestry with a DNA test.
When Crasnianski has an idea, Photo-Me establishes a small R&D team to investigate. “They have constant meetings,” said Coutaz-Replan, who has worked with the CEO for 22 years. “It’s a process that can take a lot of energy.”
New ventures are offsetting losses in Sales & Servicing, which makes film photo-developing equipment for stores. The unit had an operating loss of 600,000 pounds ($937,000) in fiscal-year 2013, down from 2.5 million pounds in 2012, and is responsible for a three-year decline in company revenue. It has been whittled down to 11 percent of sales.
“It has been constantly declining and now it’s completely dying,” Coutaz-Replan said. “You can see this also from the big players like Kodak.”
Kodak, which sold the first consumer camera 125 years ago, emerged from bankruptcy this week to focus on printing technology for corporate customers, touch-screen components and film for movies. It no longer offers consumer photo developing, an industry it once dominated.
Photo-Me, with 24,900 photo booths in 15 countries from Thailand to Germany, plans to stick with this product. It engaged Philippe Starck, designer of the Mondrian hotel in Los Angeles and Miss Ko restaurant in Paris, to redesign the booths and plans to make as many as 2,000 this year.
Photo-Me’s profit rose 21 percent to 17.4 million pounds in the year through April, compared with a 19.9 million-pound loss in fiscal year 2008 that prompted Crasnianski’s hiatus. The company is valued at about 370 million pounds, and the CEO is the largest shareholder with a 21 percent stake.
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